McCabes News
Litigation and Dispute Resolution
Deemed Subdivisions – how to avoid hidden leasing costs
27 February, 2017
The Court of Appeal has recently affirmed a decision to hold a religious tribunal guilty of contempt of Court for trying to pressure one of its adherents into submitting to its jurisdiction for a commercial dispute, as opposed to bringing a claim in the Supreme Court of New South Wales. The case serves as a reminder of everyone’s right to have their commercial disputes heard by the civil courts, and to be able to do so free from pressure from religious bodies.
The genesis of the dispute
Live Group is a payment service provider based in Sydney. In 2016, they entered into a contract with SalesPort, a digital marketing company based in the United States, for social media marketing services. As is typical for commercial contracts, this agreement contained a dispute resolution clause. Less typical were the terms of this dispute resolution clause. The key directors of both SalesPort (Mr Kuzecki) and Live Group (Mr Barukh) are observant Orthodox Jews. The clause provided that if a dispute could not be resolved by the parties or via a third party, then the matter was to be heard and determined by Rabbi Gutnick, an Orthodox Jewish Rabbi and member of the Sydney Beth Din, which is a Rabbinical court.
A dispute between Live Group and SalesPort arose, and Live Group terminated the contract. Mr Kuzecki sought to invoke the jurisdiction of the Beth Din, and requested a Din Torah, being a final adjudication of the dispute pursuant to Jewish law. The Beth Din issued a summons to Mr Barukh, who wrote back stating that he did not intend to appear, that the Beth Din was not the appropriate forum to deal with the dispute, and that any claim should be brought before a civil court in Australia.
What followed was a series of emails and letters between various Rabbis and Mr Barukh’s solicitors. During this correspondence, it was stated that if Mr Barukh failed to submit to the jurisdiction of the Beth Din then he would be subject to various religious sanctions. Mr Barukh commenced proceedings in the Supreme Court of New South Wales against four Rabbis (being the three judges and the registrar of the Beth Din) seeking injunctions preventing the Beth Din from imposing religious sanctions for failing to submit to its jurisdiction, and seeking orders that the members of the Beth Din are in contempt of court.
What is contempt of court?
The dispute was heard at first instance by Sakar J of the Supreme Court. After briefly summarising the dispute, his Honour set out the following general principles on contempt of court:
- The law on contempt of court is grounded on the right of unimpeded access to the courts.
- It is of “extreme public interest” that no conduct should be permitted which is likely to prevent a litigant from having their case tried free from prejudice.
- A claimant for contempt of court must establish, to the criminal standard of proof, that the conduct has “as a matter of practical reality, a real and definite tendency to interfere with the course of justice”.
- Civil contempt involves disobedience to a court order or breach of an undertaking, while criminal contempt is where there is contempt in the face of the court or an interference with the course of justice.
- It is crucial to distinguish between proper and improper pressure on a litigant. Pressure may be actual or threatened, conditional or unconditional. The conduct in question may be lawful and still be improper pressure, so as to amount to contempt.
His Honour then proceeded to consider previous authorities where improper religious pressure had been put on a litigant. The first is Hillfinch Properties Ltd v Newark Investments Ltd, in which Slade J of the Chancery division of the High Court of the United Kingdom was prepared to accept that it is contempt of court for a rabbinical court to threaten practicing orthodox Jewish potential litigants with excommunication.
The other is Yeshiva Properties No 1 Pty Ltd v Lubavitch Mazal Pty Ltd, where Young CJ in Eq similarly found that putting pressure on a potential litigant of religious excommunication if litigation is pursued may be contempt of court, even where the pressure was put on the litigant before the proceedings commenced.
The principle can be neatly summarised from the words of Judge Sir James Wilde from the old case of In re Mulock [1864] 164 ER 1407:
“From the pressure of this threat [the plaintiff] seeks protection, and [they] claim a right to approach this court free from all restrain or intimidation. It is a right that belongs to all suitors … No one can doubt that the very offering of such a threat to a suitor in this Court, for such a purpose, is in itself, and quite independently of its subsequent fulfillment, a contempt of Court.”
That is, a threat of a sanction, religious or otherwise, may amount to improper pressure (even if it is something that someone is legally allowed to do) if the threat is aimed at stopping someone from exercising their right to petition a civil court for relief.
No exodus of the civil courts
As for the conduct in question in the present case, Mr Barukh argued that the various correspondence from the members of the Beth Din as to the consequences of him failing to submit to its jurisdiction was improper pressure. The members of the Beth Din argued that their communication was private, lawful, reasonable, and an accurate reflection of Halachic law.
The defendants also argued that they were not threatening religious sanctions for going to a civil court (in fact, Mr Barukh was not even seeking to bring proceedings at the time), rather the threats were aimed at securing his participation in the religious court, being the Beth Din.
Sakar J did not accept this distinction, calling it “sophistry” and “disingenuous”. This is because Mr Barukh, by necessary implication, would have to waive his right to be heard in a secular court by agreeing to have his case heard by the Beth Din. Therefore, whilst the Beth Din may say that the sanctions flow from Mr Barukh’s failure to participate, the “practical reality is the sanctions inevitably result from attending a secular court without the permission of the Beth Din”.
His Honour went on to find the members of the Beth Din guilty of various charges of contempt for their correspondence with Mr Barukh. His Honour stated that:
“Quite simply, to threaten reprisal … merely because of a firmly held view a civil court is the appropriate forum for the determination of a commercial dispute, is to not only threaten the integrity of the Court but its authority as the ultimate decision maker. There is no contest between the Beth Din and the relevant curial process in the State of New South Wales. The Beth Din is not entitled to insist – under threat of religious sanction – it is the only method by which an observant Jew is entitled to have his or her dispute determined. It is not to the point to simply categorise, in an attempt to trivialise, the Beth Din as purely religious. The Beth Din intends itself to be an exclusive jurisdiction over observant Jews, otherwise penalties ensue.”
On the question of religious freedom, his Honour went on to say that his finding:
“is not a restriction on religious freedom, it is a restriction in our democracy of any person holding and acting upon the view a civil court is the appropriate place for the determination of commercial disputes between Jews, or for that matter gentiles.”
The Supreme Court imposed fines between $20,000 and $10,000 to the various members of the Beth Din. They appealed to the Court of Appeal. The Court of Appeal, by majority (Bathurst CJ and Beazley P), upheld the findings of contempt, but reduced the fines to between $7,500 and $2,500.
The plurality agreed that the Beth Din’s conduct amounted to improper pressure on Mr Barukh. The Beth Din also sought to rely on the dispute resolution clause in the contract between SalesPort and Live Group, however the Court found that this clause did not bind the parties to submit to the Beth Din, and was not an agreement to have the dispute determined in accordance with Jewish law.
Judicial exegesis: what does this all mean?
The upshot of this dispute is that religious tribunals can not threaten sanctions against their adherents for expressing a preference, or actually seeking, that their disputes be agitated before the civil courts. Whether the sanction is for participating in the secular court, or for failing to participate in the religious one, is irrelevant: they are in substance two sides of the same coin.
We all have a right to approach a civil court for relief, and if someone (being a religious body or not) seeks to impose a sanction for doing so, this will be contempt of Court. Parties to commercial contracts can, and often do, seek a variety of different ways to resolve their disputes. Depending on those involved, that may include a reliance on theological principles. However, when someone wants to bring that commercial dispute into the domain of the Courts, it is improper to pressure them out of doing so on religious grounds.
